Question

To furnish the home office, Ms. Smith spent $5,000 on office furniture on January 1, 2018. Ms. Smith was getting tired of the dated bathroom on the top floor of the house and decided to renovate it for a cost of $25,000.

Can you claim the $25000 bathroom renovation being the business is mostly ran in the basement on nights and weekends?

Answer 1

There are broadly three kind of situation as mentioned under :

1. Exclusively for home office. If a given expense incurred exclusively for the home office, the entire expense will be deductible as a "direct" home office expense. For example, the cost of cubicle for meeting room will be a direct expense
2. Entire house. Where the expense applies to the entire house, it's an "indirect" home office expense and only relevant proportionate part of it will be deductible. Heating, air-conditioning, rent or mortgage payments are examples of indirect expenses.
3. Non-business portion. If the expense applies only to the non-business portion of the house, none of the expense will be deductible. An example of a nondeductible expense would be remodeling the master bathroom to install a personal sauna.

The expense going to be incurred for renovation of bathroom will be for the non-business purpose since business is run basement while the bathroom proposed to be repaired on top floor which is not used for office purpose. In view of the same this expense will be for non-business potion hence will not be deductible.